Saudi to become key aluminium exporter

Saudi Arabia is expected to become a major aluminium exporter when three mega smelter projects worth more than $10 billion (Dh36.7bn) start production of nearly 2.4 million tonnes within five years, the kingdom's largest bank said yesterday.

The aluminium industry in Saudi Arabia, the largest Arab economy and the world's dominant oil power, is currently concentrated in the downstream sector as the Gulf country has no primary aluminium production, National Commercial Bank (NCB) said in a study sent to Emirates Business.

More than 110 companies make up the sector, which processes various types of imported aluminium products to produce aluminium fixtures for construction, kitchens, cooking utensils and other aluminium related applications, said the eight-page study on Saudi Arabia's aluminium industry.

Further diversification of the sector's downstream production portfolio will allow local manufacturers to enter new markets and increase their market share.

"Furthermore, Saudi Arabia is on the verge of becoming a major upstream player in the global aluminium industry. Upon completion, three announced aluminium smelters will supply roughly 2.44 million metric tonnes per annum (mntpa) of primary aluminium by the start of 2016," said NCB.

"The projects, valued at around $19.3bn, will turn the Kingdom into a net exporter, and eventual global supplier, of the metal."

According to the study, several factors are driving the aluminium industry in Saudi Arabia, mainly its ongoing programme to diversify its oil-reliant economy and the abundance of cheap energy for industrial projects. The kingdom is also the only GCC nation to possess massive quantities of alumina, the main component in the production of aluminium.

"Many factors are driving growth in the Saudi Aluminium sector. Most importantly are the government initiatives to rapidly expand the non-oil economy. Despite the tightening conditions of 2009, the real non-oil GDP grew by three per cent, with the private sector in particular expanding by 2.54 per cent," it said.

"The 2010 national budget includes SR260bn for investment projects that ensure sustainable and balanced development, as well as job creation. The Kingdom has recently acknowledged its massive minerals resources, and has set goals to develop its minerals and mining sector to become the third pillar of the economy after hydrocarbons and petrochemicals."